Key Takeaways:
NatWest Group reported Q2 operating profit of £2.3 billion, up 12.4 percent, and raised its 2026 return-on-tangible-equity guidance to above 19 percent.
"Our performance makes clear we have the capability and capacity to grow at scale," Chief Financial Officer Katie Murray said, citing growth across the group's three businesses, improving efficiency and low credit losses.
Q2 income excluding notable items rose 5.4 percent to £4.4 billion, while non-interest income increased 15 percent. The cost-income ratio improved one percentage point to 45.5 percent. Customer assets and liabilities climbed £86.8 billion to £986.9 billion, including £73.9 billion from the Evelyn Partners acquisition.
The guidance raise shows management expects profitability to hold above 19 percent ROTE through 2026. NatWest expects to announce its next share buyback alongside full-year results in February.
For the first half, income growth of 8.9 percent exceeded cost growth of 4.5 percent, reducing the cost-income ratio by 2.8 percentage points to 46 percent. Net income attributable to ordinary shareholders was £1.6 billion in Q2, with earnings per share of 54 cents on revenue net of interest expense of $6.04 billion, which beat Street forecasts.
Customer lending grew £9.7 billion in the quarter, including £3.9 billion of mortgage growth, lifting NatWest's mortgage stock share to 12.7 percent. Commercial and Institutional lending rose £5.7 billion, with the strongest growth among larger corporates. Customer deposits increased £2.8 billion, led by a £2.5 billion gain in Commercial and Institutional deposits.
The bank recorded a £140 million impairment charge, equivalent to 13 basis points of loans, with no new signs of stress across its businesses. NatWest ended the first half with a CET1 ratio of 13.2 percent after the Evelyn Partners acquisition and after accruing 50 percent of attributable profit for ordinary dividends. The group generated 197 basis points of CET1 capital during the first half.
Management raised full-year income guidance to approximately £17.9 billion and expects other operating expenses of about £8.5 billion. Capital generation before distributions and the impact of Evelyn Partners is expected to exceed 240 basis points. The bank's total MREL ratio stood at 30.6 percent, with a leverage ratio of 4.7 percent and average liquidity coverage ratio of 140 percent.
The raised guidance positions NatWest for sustained profitability above 19 percent ROTE, a level that would place it among the top-performing UK lenders. Peers including Lloyds Banking Group and Barclays will report their own results in the coming weeks, providing a sector benchmark. Investors will watch the full-year results in February for the next share buyback announcement and updated capital return plans.
This article is for informational purposes only and does not constitute investment advice.
